Department of Finance and Administration

For most of this year, the budget was the hottest topic for legislators and the governor. Both branches battled, then came to an agreement no one seems enthusiastic about. The deal suggested by Gov. Susana Martinez essentially amounted to using bonding money normally reserved for state infrastructure to balance the budget. State lawmakers request the bonding money for state infrastructure projects. Issuing bonds works like a home mortgage: the state borrows money backed by oil and gas revenue and pays it back with interest over the years. Senate Finance Committee Chairman John Arthur Smith, D-Deming, said the funding method “sets a poor precedent” while Senate Minority Leader Stuart Ingle, R-Portales, said he didn’t “like to do this either.”

And yet, the plan passed with a unanimous vote in the House of Representatives and just two dissenting votes in the Senate.

A framed newspaper clipping adorns the wall outside the office of New Mexico Senate Majority Leader Peter Wirth. The piece, dated May 25, 2002, serves as a reminder of the time when Republican Gov. Gary Johnson, who had vetoed 700 bills in six years, finally overplayed his hand. One of those vetoes was the $3.9 billion spending plan for the coming fiscal year, a 1.1 percent increase over the previous year. Johnson, a fiscal hawk, said the plan didn’t go far enough to control the growth of Medicaid. With just a few weeks left in the fiscal year, the Democratic Party-controlled House and Senate called themselves back to Santa Fe for a special session to override the veto and keep the government operating.

The latest update on the state’s budget situation was filled with negative news, including a large reduction from previous budget projections released in August. The current year’s budget is projected to be $69 million in the hole. For the fiscal year starting July 1, 2017, state budget experts project $300 million less money to spend than the budget in the current fiscal year—which itself saw massive cuts during the special session, with 5.5 percent cuts to most agencies. The update, presented by experts from the Department of Finance and Administration and the Taxation and Revenue Department Monday morning to the Legislative Finance Council, comes a month and a half before legislators go back to work during a regular legislative session to deal with next year’s state budget. During a special session in September and October, the Legislature plugged a $600 million budget deficit that encompassed last year’s budget and the current budget through a combination of tapping into reserves and making cuts.

The governor’s office contends a taxpayer-funded account used to host dignitaries and throw parties isn’t subject to open records laws to the same extent other public funds are. Sometimes the subject of controversy, the account catapulted into public view last winter when one of the parties its money was used for ended with police responding to noise complaints from a possibly intoxicated Martinez. Each year, the state Legislature grants $70,000 in taxpayer money to the governor for a contingency fund, which per state law she can use for “purposes connected with obligations of the office.”

The fund is unusual in that, unlike most state government accounts filled with public money, the state Legislature exempts it from required annual audits. But after NM Political Report filed an Inspection of Public Records Act request with the governor’s office this spring for six years worth of expense documents associated with the contingency fund, the office only provided broad summaries of the expenses. Missing were documentation like the checks, purchase orders, reimbursements and purchase requests associated with the fund that we asked for.

Legislators were told by the Legislative Finance Committee director Monday that the budget situation is still dire. “We’re on fumes,” LFC Director David Abbey told the Revenue Stabilization and Tax Policy Interim Committee. The legislators will have to deal with revenue that is down ten percent from last year, Abbey said. The state predicted a five percent drop in revenue. Abbey said a special session may be needed to address any shortfall.

Gov. Susana Martinez isn’t properly managing the account she used to pay for her infamous holiday pizza party last year, according to an independent audit released this month. The finding stems from the governor’s contingency fund, which the state Legislature grants roughly $70,000 each year to for “purposes connected with obligations of the office,” according to state law. That’s been interpreted by past governors and Martinez as entertainment expenses for hosting officials and staff. Specifically, Martinez’s office is supposed to revert any unspent money remaining in her contingency account by the end of a fiscal year to the state’s general fund, according to the audit. Instead, her office kept leftover money into that account.

Two more top-level employees at the state Public Education Department recently left their jobs, taking the number to at least five since the beginning of the year. Terese Vigil, who headed the PED’s human resources bureau, left the department in mid-February. Aimee Barabe, director of Strategic Outreach for the department, left around the same time period. Vigil and Barabe’s exits make at least five resignations from top-level PED staffers since the end of January. The three others were Deputy Secretary for Policy and Program Leighann Lenti, Chief Information Officer Michael Archibeque and National Assessment of Educational Progress and Internal Assessments State Coordinator Stephanie Gardner.

Stressing priorities and the state’s shaky energy revenue source, Gov. Susana Martinez proposed a budget with a $228 million increase in recurring state spending. That comes out to a 3.7 percent increase over the previous year’s budget. At a press conference in a downtown Albuquerque building that houses the state Corrections Department, Martinez said her proposed budget emphasizes “three things above all others”— education, public safety and jobs. “Keeping New Mexicans safe, reforming and improving public education, and creating jobs by diversifying our economy and helping small businesses grow,” she said. The proposal comes even as legislators warn about the effects of low oil prices that show no sign of increasing.

Revenue projections continue to fall thanks to oil prices remaining lower than previous projections, meaning that there could be some tough decisions in the upcoming legislative session. The new projections show that legislators will have $232 million in new funds for the upcoming legislative session, which is down by $61 million from the previous projections. The projections are for the Fiscal Year 2016 budget and came at a Legislative Finance Committee meeting on Monday. Even with the reduced amount, Senate Finance Committee chair John Arthur Smith, D-Deming, was skeptical of the projection. “We hope the revenues materialize, but it’s going to be extremely painful if they don’t,” Smith said.

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